Berkshire Hathaway has released a new 13-F filing today which reveals the composition of the company’s equity portfolio as of September 30, 2009.  In addition, the company released an amended 13-F filing for Q2 which shows a position in Exxon Mobil as of June 30, 2009.  This was previously not disclosed due to Berkshire’s request for confidential treatment for the position.

Highlights

During the third quarter, Berkshire made further purchases of Exxon Mobil and also initiated positions in Nestle, Republic Services, and The Travelers Companies.  Berkshire closed out positions in the Eaton Corporation and Wabco Holdings while reducing its stake in Conoco Phillips, Moody’s, NRG Energy, Sun Trust Bank, and WellPoint.

Please note that the 13F report only covers holdings that trade in the United States. The report includes shares of foreign issuers only if those shares are held as ADRs that trade on a United States stock exchange. Shares that trade on foreign exchanges are not reported on this form. Therefore positions such as POSCO, Swiss Re, Tesco plc, and BYD are not covered in this analysis.

Let’s take a closer look at Berkshire Hathaway’s portfolio changes during the third quarter as well as examine the likely performance of the portfolio during the first half of the fourth quarter.

New Positions

As noted above, Berkshire amended its 13-F filing for Q2 and revealed a stake in Exxon Mobil.  The company held 854,490 shares on June 30 and increased the stake to 1,276,290 shares worth $87.6 million as of September 30.  Based on the size of the purchase, it is possible that GEICO’s Lou Simpson initiated this position rather than Warren Buffett.

The Nestle position acquired during the third quarter was worth $144.7 million on September 30 and, assuming that the same number of shares are held as of today, the value of the investment is now $161.5 million.  This is an interesting purchase given Berkshire’s large existing investment in Kraft and the ongoing drama associated with Kraft’s hostile bid for Cadbury.

Berkshire also added a position in Republic Services worth $96.3 million on September 30.  Republic Services is a provider of services in the solid waste industry operating in 40 states.  In addition, a small position in The Travelers Companies was added to the portfolio.

Increased Positions in Wal-Mart and Wells Fargo

Berkshire nearly doubled the size of its position in Wal-Mart during the third quarter.  As of September 30, Berkshire owned 37,836,642 shares of Wal-Mart worth $1.86 billion.  The Wal-Mart position is valued at slightly over $2 billion today assuming the same number of shares are held.

Berkshire added 10.7 million shares to the already massive position in Wells Fargo.  As of September 30, the Wells Fargo position was worth $8.8 billion, and has been nearly unchanged so far this quarter.

Reduced Positions in Conoco Phillips and Moody’s

Berkshire reduced its position in Conoco Phillips by 7.1 million shares.  This is a continuation of the gradual liquidation of the position following a large impairment charge that was taken in the first quarter.  Please refer to the review of Q1 results for a more detailed discussion of the Conoco impairment.

The position in Moody’s continues to be slowly liquidated with 8.8 million shares sold during the third quarter.  So far, Berkshire has sold an additional 1.15 million shares in the fourth quarter.  Berkshire still holds over 38 million shares of Moody’s based on a recent Form 4 SEC filing.  It appears that Warren Buffett is trying to slowly liquidate this position after making some lukewarm statements about the economic moat of the credit rating firms during Berkshire’s 2009 annual meeting.  For coverage of Mr. Buffett’s comments on Moody’s at the annual meeting, please click on this link.

Strong Results in Q4

Berkshire’s portfolio appears to be posting strong results close to the mid-point of the fourth quarter.  We  know that Berkshire has sold shares of Moody’s during the quarter based on the Form 4 filing referred to above.  In addition, based on Warren Buffett’s recent interview with Charlie Rose, we know that Berkshire’s shares in Union Pacific and Norfolk Southern have already been sold.

Adjusting for the proceeds of the Moody’s sale and estimating the proceeds of the Union Pacific and Norfolk Southern sales, we can estimate that Berkshire’s equity portfolio is up 8.6% for the quarter so far assuming no other changes were made to the positions reported on September 30.  The increase in the value of the portfolio plus value of the liquidated shares of Moody’s, Union Pacific, and Norfolk Southern should account for approximately $4.8 billion.  Adjusting for deferred taxes owed on the gains, this would account for approximately a $2,000 increase in book value per A share since the figures reported on November 6 in Berkshire’s Q3 report.

For a more detailed look at Berkshire’s portfolio holdings, we have prepared an Excel workbook.  The first worksheet shows Berkshire’s portfolio changes for the third quarter.  The second worksheet attempts to estimate Berkshire’s portfolio value as of November 16. The Excel file is available under the resources listing shown below.  (A few readers reported problems downloading/opening the excel file so a PDF file has also been posted below).

Resources:

Excel workbook with Q3 13-F Analysis and Q4 Estimates (Source: The Rational Walk)

PDF File with Q3 13-F Analysis and Q4 Estimates – Same Data as Excel File above
Berkshire Hathaway’s Q3 13-F Filing (Source: SEC)
Berkshire Hathaway’s Q2 13-F Amended Filing (Source: SEC)
Berkshire Hathaway’s Q2 13-F Original Filing (Source: SEC)
Berkshire Hathaway Form 4 Filing – 10/28-29 Moody’s Sale (Source: SEC)

Disclosure:  The author owns shares of Berkshire Hathaway.

Berkshire Adds Exxon and Nestle; Reduces Conoco and Moody’s in Q3
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